TMI Blog2021 (12) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... goods seized by the Deputy Commissioner on his own initiative under Rule 7(1)(b) or on the basis of a registered right holder under Rule 7(1) (a)? - HELD THAT:- Rule 7(1)(b) deals with cases where the IPR has not been registered with the Customs and in such a case, the Rights holder has to give notice and fulfill obligations for registration within five days. On the other hand, Rule 7(1)(a) deals with cases where the Rights have already been registered with the Customs and in cases of suspension of clearance, the Rights holders have to join the proceedings within ten working days. In this case, the clearance of the goods was suspended on receiving information regarding some mis-declaration and on the request of the appellant, the goods were warehoused and thereafter a Panchnama was drawn after detailed examination which revealed that the goods had also logos of popular brands - As the seizure of the goods and suspension of the clearance was based on the IPR already registered with the Customs, it is covered under Rule 7(1)(a) and not under Rule 7(1)(b). Therefore, the assertion of the learned counsel that the clearance of the goods was suspended by the Deputy Commissioner on his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act, 1962 correct? - HELD THAT:- There is no force in the submission of the counsel that the invoice value should have been accepted as the assessable value without re-determining through the deductive method. Was the confiscation of goods under section 111(d) (m) of the Customs Act, 1962 correct? - HELD THAT:- As far as the goods infringing the IPR (counterfeit goods) are concerned, once they are found to have violated the Rights of the rights holder, as per Rule 6, they become prohibited goods under section 11 of the Customs Act, 1962. Section 111(d) squarely applies to prohibited goods which are imported. It was also evident that these goods were not included in the entry made in the Bill of Entry. In fact, Shri Farooque, Director of the appellant firm has, after checking with his overseas Chinese supplier, confirmed that the goods were not even ordered by them and were sent by mistake of the labourers. Therefore, confiscation of these goods under section 111(l) in the order of the original authority affirmed in the impugned order is correct and proper - As regards the goods which were not found to infringe any IPR, the same were found to be of not the value which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appearance Shri V.V. Gautam, Advocate, Ms. Isha Vashisht, Advocate and Shri Anshul Mittal, Advocate for the Appellant Shri Rakesh Kumar, Authorized Representative for the Respondent P.V. SUBBA RAO : This appeal is filed by the appellant assailing the order-in-appeal dated June 14, 2019 passed by the Commissioner of Customs (Appeals), New Delhi rejecting the appellant s appeal and upholding the order-in-original dated June 14, 2018 passed by the Additional Commissioner of Customs (Preventive), New Delhi. 2. The appellant filed Bill of Entry No. 4927337 dated 24.01.2018 through its Custom House Agent M/s Ananya Exim. Receiving information about mis-declaration of the goods in terms of quantity and value in this consignment, the goods were examined and then seized by the Customs officers on 7.2.2018. The Panchnama states that as the goods were found to be misdeclared in terms of quantity and value, imported goods were seized under Section 110 of the Customs Act, 1962 vide seizure Memo dated 7.2.2018 on reasonable belief the same were liable for confiscation under provisions of the Customs Act, 1962. The consignment was handed over to the Central Warehousi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Invoice No. KM-1059 dated 29.11.2017 he said that he would discuss it with their Chinese counterpart and explain later. Regarding the shoes bearing marks such as AIR, Max, logo of Men printed on shoes and branded NIKE shoes he explained that he was only a trader of unbranded shoes and would clarify after consulting the Chinese counterpart. He also asserted that the shoes bearing brand names like NIKE and Puma on the flaps do not belong to the appellant as it had never ordered the same. After discovering that these names were on the flaps, he contacted his Chinese counterparts who said that due to mistake of their labour, they dispatched those shoes which were actually not meant for him. He asserted that such shoes were accidentally mixed with their goods and they do not belong to him. He agreed that the goods were misdeclared in terms of description as well as value as the same have been wrongly sent by the supplier. Regarding the valuation of the goods (since the goods which were imported were not tallying with the invoice), he suggested that a joint market enquiry be conducted to ascertain the actual price of the goods. Accordingly, a joint enquiry was conducted in which Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively. 6. Even if the Right Holder does not issue a notice under Rule 3 and no registration is granted to the right holder under Rule 4, the Deputy Commissioner or Assistant Commissioner may, under Rule 7(1)(b), on his own initiative, suspend the clearance of goods in respect of which he has prima facie evidence that they are infringing IPR. In such a case, the right holder has to fulfill the obligations of issuing a notice under Rule 3 and fulfill the condition under Rule 5 for registration within five days from the date of suspension of clearance; else, the goods should be released. Rule 7 also requires the right holder to join the proceedings within 10 working days from the date of suspension of clearance of the goods which limit can be extended by the Commissioner for another 10 days. 7. In this case, when a reference was made by the officer, the Deputy Commissioner (IPR Cell), has, on 22.2.2018, informed that NIKE, Puma, Adidas are registered with them as right holders under the IPR Rules, 2007. Accordingly, letters dated 5.3.2018 were issued to M/s Nike, Adidas and letter dated 6.3.2018 to Puma asking them to join the proceedings in terms of rules and they did so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adidas purchase order no. Production date Two dimensional bar code The label attached to the sample product does not contain the correct information which every genuine product must contain. The sample product does not contain the correct place of manufacture, factory code, production date, adidas article code, unique security code is missing, adidas purchase order no. and bar code is fictious, incorrect coding and numbering of the above mentioned salient features in the sample product handed over to us proves that it is a fake product. Absence of the above mention salient features in the sample product over handed that it is a fake product. 5. The raw material and the technology used in the manufacturing of a genuine product is of a very good quality and standards and thus the overall finish and the quality of a genuine product is very superior The raw material and the technology used in the manufacturing of the sample products handed over to us is of poor quality and the product as a whole is poorly finished with poor pasting and stitching which is evident on comparison with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndards of original PUMA product. iv. The packaging of the product does not match the standards of original PUMA products. v. The size of the PUMA leaping Cat device on the shoes does not match with the standards of original PUMA product. vi. The finishing of the product is not matching with the standards of original PUMA product. vii. The form strip shown in the images is stated as counterfeit in the below image. viii. The images mentioned are stated as counterfeit and should not be released under any circumstances. ix. The side strip used in the design of the shoe is also counterfeit. x. The shoe flap are the essential part of the shoe bearing the brand name of PUMA imported by Sheikh and are counterfeit product and can t be released if any circumstances. 8. Although Nike also submitted its report, it has not subsequently submitted the required bond and bank guarantees with respect to this consignment and hence in the impugned order, the rights of Nike were not enforced. 9. It, therefore, appeared that all the goods imported by the appellant except those with Max mentioned on them were counterfeit goods. The details of the various types ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 The DC (IPR) has informed that the NIKE brand is registered with Customs. Also the said product was checked by the authorized representative of NIKE and after examination of the same, they informed that the said product pertain to NIKE brand. The authorized representative vide their letter dated 14.03.2018 has informed that the goods are counterfeit products. Total 464 11084 Description of Shoe Flap (Brand) FLAP NIKE 1770 Vide letter dated 22.0.3.2018 of authorized representative, they informed that there are counterfeit products. LOGO ADIDAS 4960 Vide letter dated 22.03.2018 of authorized representative, they informed that these are counterfeit products. FLAP PUMA 2890 Vide letter dated 12.03.2018 of authorized representative, they informed that these are essential part of the shoes and also counterfeit products. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 (which are identified as shoes of adidas brand on the basis of three strips vide technical report dated 14.03.2018 submitted by authorized representative of M/s Adidas and on the basis of which they claimed their IPR), Logo of Horse on shoes and Man Printed on Shoes (regarding which M/s Puma Se has claimed its IPR through its authroised representative vide its technical report dated 21.03.2018) valued at ₹ 14,25,462/- covered under Bill of Entry No. 4927337 dated 24.01.2018 under Section 111(l) (m) of the Customs Act, 1962. However, I give an option to the importer to redeem the said goods i.e. Shoes Max (Mentioned on Shoes), Shoes Mark AIR , Shoes (Logo of Nike Presto ) on payment of redemption fine of ₹ 15000/- under Section 125(1) of the Customs Act, 1962. (iv) I confirm the consequential Customs Duty amounting to ₹ 3,93,133/- in respect of the goods other than counterfeit goods (shoes bearing the brand name Adidas and Puma) imported vide Bill of Entry No. 4927337 dated 24.01.2018 (as discussed above against the importer, M/s Sheikh Mahajan LLP 786, ground Floor, Gali No. 6A, Zakir Nagar, Okhla, New Delhi (IEC-ADJFS8130M) under Section 28(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case, it is evident from the report of Assistant Commissioner, which has been quoted by the learned Original Authority at page No. 8 of the order in original (which is placed at page No. 185 of the paper book), wherein in the chart at serial No. 4 5, it is mentioned that logo of Horse on shoes and logo of men printed is not registered with customs. Since the goods of these two brands are not registered with the Customs, in terms of Rule 6 of IPR Rules read with Rule 11 of Customs Act, 1962, the goods are not prohibited and, thus, the seizure, confiscation, imposition of penalty upon the goods and demand of duty is illegal and liable to be set aside. (ii) The confiscation of goods under section 111(d) (m) of the Customs Act, 1962 is illegal, as there is no misdeclaration of either description of goods, brand and value. (iii) The rejection of value of the impugned goods under section 14 of the Customs Act, 1962 is illegal as value can be rejected only in exceptional circumstances, as defined under Section 14 such as when the buyer and seller are related, price is not the sole consideration and there is no sale. In the instant case, none of the factors exists. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of SRK Enterprises Vs. Commissioner of Customs (Imports) Nhava Sheva, 2012 (280) ELT 264 (Tri.-Mum.), wherein this Tribunal observed that since the timeline prescribed in IPR Rules has not been followed (relying upon judgment of Landom Distributors Pvt. Ltd. (Madras High Court), provisions of IPR Act and Rules inapplicable). 13. Learned Departmental Representative supports the impugned order. On the first and sixth arguments of the appellant, learned Departmental Representative submits that the shoes in question not only had the logos of the horse and the man but also included with device mark FORM strip and Trefoil besides Puma on the flap of the shoes and thereby infringed the IPR of Puma and Adidas and were counterfeit goods. They violated the IPR of the right holder and Puma. He submitted that the Delhi High Court has, in the case of Puma Se Anr Vs. Footwear (Klick) India Pvt. Ltd. Ors. in CS (OS) 2518/2015 dated 24.8.2012 held that the device mark Form strip Puma, and marks are registered marks of Puma besides catalog and the word Puma. Further, in PUMA SE ANR Vs. Dashmesh Footwear Ors CS (COMM) 43/2015 dated 17.12.2015 also the High Court of Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s imported. Shri Farooque also agreed that the MRP was not properly embossed and said the same would be got done on the shoes. Since the description of the goods was different from those that of imported, Shri Farooque suggested that a joint market survey to ascertain the price of the goods. This was the statement by Shri Farooque, Director of the appellant. Another Director of the appellant, Shri Rajeev Kumar Jaiswal also accepted that the goods were mis-declared in terms of value and description and undertook to pay the differential duty fine and penalty voluntarily, if any, imposed by the Department. He also waived requirement of show cause notice as also the opportunity of personal hearing as in this case as all relevant details have already been explained to them and he understood the same and requested to dispose of the case. These statements have not been retracted. What has been admitted need not be proved although in this case it has also been proved through the reports of the right holders. The appellant has not taken the stand that there was no mis-declaration before the original authority and has on the contrary admitted to the same during the adjudication proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed by or under Customs Act or any other law for the time being for in force. Section 111(m) provides for confiscation of goods which do not correspond in value or in any other particular with the entry made under Customs Act. The entry in question is the Bill of Entry filed by the appellant. Admittedly, the goods do not confirm to the description. As per the report of the right holders given after examination of the imported goods, the goods infringe the Intellectual Property Rights of the right holders. Therefore, as per Rule 6 of the IPR Rules read with Section 11 of the Customs Act they are prohibited goods. Therefore, confiscation both under Section 111(d) and 111(m) is valid and proper. With respect to the seventh ground that imposition of redemption fine and penalty under the Customs Act is illegal and arbitrary, learned Departmental Representative submits this submission has no force because not only did the goods not correspond in description but also in value. Therefore, the confiscation under Section 111 is correct and as also the option of allowing redemption of the goods non-IPR violating goods under Section 125(1). He also supports the imposition of penalty under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the submissions on both sides. The issues to be decided in this case are: i) Were the goods which were confiscated absolutely prohibited goods under Section 11 of the Customs Act read with Rule 6? ii) Were the goods seized by the Deputy Commissioner on his own initiative under Rule 7(1)(b) or on the basis of a registered right holder under Rule 7(1) (a)? iii) Have the Right Holders joined the proceedings within the time frame set out in the Rules or not and consequently are the proceedings vitiated as asserted by the appellant? iv) Was the rejection of the declared value of the impugned goods under section 14 of the Customs Act, 1962 correct? v) Was the re-determination of assessable value under section 14(1) of the Customs Act, 1962 correct? vi) Was the confiscation of goods under section 111(d) (m) of the Customs Act, 1962 correct? vii) Was the absolute confiscation of goods having men mark, horse mark and three stripes is illegal, as these two marks were not registered with the customs but which also had the three stripes and Trefoil mark? viii) Was imposition of redemption fine of ₹ 15,000/- under section 125(1) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and the right holders of the same. We find that the impugned goods have, therefore, violated the IPR and the import of these goods was, therefore, prohibited under Rule 6 read with Section 11. 18. Learned counsel for the appellant also argued that the goods were detained by the Deputy Commissioner on his own initiative and therefore, the proceedings fall under Rule 7(1) (b) and the Right holders should have fulfill their obligations within five days and since they have not, the goods should have been released. Rule 7 reads as follows: 7. Suspension of clearance of imported goods.- (1)(a) Where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, based on the notice given by the right holder has a reason to believe that the imported goods are suspected to be goods infringing intellectual property rights, he shall suspend the clearance of the goods. (b) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may, on his own initiative, suspend the clearance of goods , in respect of which he has prima-facie evidence or reasonable grounds to believe that the imported goods are goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er conditions of their import under the Customs Act, 1962, have been complied with: Provided that the above time- limit of ten working days may be extended by another ten working days in appropriate cases by the Commissioner or an officer authorized by him in this behalf. (7) In the case of perishable goods suspected of infringing intellectual property rights, the period of suspension of release shall be three working days which may be extended by another four days subject to the satisfaction of the Commissioner or the officer authorized by him in this behalf that such extension shall not affect the goods. (8) Notwithstanding anything contained in these Rules, in the case of suspension of clearance of perishable goods on the basis of notice of the right holder or his authorized representative, the right holder or his authorized representative shall join the proceedings as required under these Rules within three working days or the extended period as provided in sub-rule (7) and in case of suspension of clearance of perishable good by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, on his own initiative, the right holder sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (IPR cell), he confirmed that the logos were registered with the Customs. Thereafter, the goods were seized. As the seizure of the goods and suspension of the clearance was based on the IPR already registered with the Customs, it is covered under Rule 7(1)(a) and not under Rule 7(1)(b). Therefore, the assertion of the learned counsel that the clearance of the goods was suspended by the Deputy Commissioner on his own initiative is not correct. 22. The next question is whether the Rights Holders have joined the proceedings within the time set out in the Rules or not and consequently have the proceedings been vitiated. On 5.3.2018 officers sent letters to Nike and Adidas and their representative joined the proceedings the same day. On 6.3.2018 officers sent a letter to PUMA and in reply, they sent a letter on 7.3.2018 and joined the proceedings. Learned Counsel s submission is that they have not executed a consignment specific bond with the Customs within ten days. We find Rule 7(3) requires the Rights holders to join the proceedings within 10 days. It does not require any bond to be executed within 10 days. Once they join the proceedings, they can examine the goods, take samples f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retailer s margin, importer s margin, post-importation costs from the market price and what was left after these deductions was taken as cum-duty price and the value calculated backwards. d) There is nothing on record to show that Shri Farooque gave the statement under duress. e) After the entire exercise, another Director of the appellant firm, Shri Rajeev Jaiswal gave in writing that he fully understood the case and waived the requirement of SCN and personal hearing and asked for an order. f) Having accepted that the imported goods were different from those in the documents and having confirmed from its overseas supplier and clarified that the goods were sent by mistake and having suggested that value may be determined through a joint market survey and having participated in such a survey and having never contested the value at the time of adjudication, the appellant cannot now turn back and fault the Revenue for accepting the appellant s own suggestion and thereafter determining the assessable value of the goods through a joint survey along with the appellant. 24. We, therefore, find no force in the submission of the counsel that the invoice value should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Shri Farooque, Director of the appellant firm through a joint market survey. Therefore, these goods were correctly confiscated under section 111(l) and (m). Was the absolute confiscation of goods having men mark, horse mark and three strips is illegal, as these two marks were not registered with the customs but which also had the three stripes and Trefoil mark? 28. We find that the goods were not seized for having marks of Man and Horse but were confiscated for also having other marks such as Trefoil and three stripes and Puma written on the flaps. Learned Departmental Representative relied on the judgments of Delhi High Court in PUMA SE (supra) to assert that the Form Strip is the registered trade mark of PUMA. He relies on the judgment of Delhi High Court in the case of Adidas (supra) to assert that trefoil is the registered trade mark of Adidas. Learned counsel relies on the judgment of the General Court of EU to assert that three parallel lines in any direction are not the registered trade mark of Adidas. It is his assertion that unless the shoes also have Adidas written on them, they have not violated the IPR. We find that the ratio of the judgment of the jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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